Canada

Chrysler withdraws request for fed funds

A worker on the production line at Chrysler's plant in Windsor, Ontario, works on one of the company's new minivans Tuesday, January 18, 2011. THE CANADIAN PRESS/Geoff Robins

Chrysler Group LLC says it will continue with plans to start a new minivan assembly line in Windsor, Ont., even though it is no longer seeking funding from the federal and Ontario governments.

The auto giant said Tuesday will also invest in its Brampton, Ont., assembly plant, which builds the Dodge Charger, Challenger and Chrysler 300.

Chrysler said government officials were notified earlier this week that it was withdrawing its request for $700 million in subsidies because the projects were being used as a "political football."

"It is clear to us that our projects are now being used as a political football, a process that, in our view, apart from being unnecessary and ill-advised, will ultimately not be to the benefit of Chrysler," the company said in a statement.

"As a result, Chrysler will deal in an unfettered fashion with its strategic alternatives regarding product development and allocation, and will fund out of its own resources whatever capital requirements the Canadian operations require."

The car maker also cautioned that it will start upgrading the Canadian factories with its own capital but its investment will depend on Canada's competitiveness with other global factories and cooperation with the union.

"Of particular importance for this evaluation will be the outcome of our collective bargaining negotiations that will be carried out in 2016 with UNIFOR (the merged entity of the CAW and CEP)," said Sergio Marchionne, the company's chairman and CEO.

The head of Unifor said it is pleased with Chrysler's decision to invest in the Windsor plant but it was regrettable that a "long-term" strategy for the auto industry could not be reached.

"The bottom line is that the people of Ontario and our leaders need to understand the importance of developing a long-term strategy, including public investment, if we want to have a strong, competitive advanced manufacturing sector," said Jerry Dias, national president of Unifor.

"We are deeply concerned, however, that in the long-term we are going to lose an incredible opportunity to secure Ontario's manufacturing industry well into the future," he added.

The union, which represents more than 39,000 members in the auto sector, said it will wait to hear more detail about Chrysler's plans for the Windsor and Brampton plants.

Meanwhile, the Ontario government called the decision by Chrysler evidence that negotiations had been successful between officials and the car maker.

"Our negotiations with Chrysler were consistent with our past level of support for major auto investments," said Eric Hoskins, Ontario minister of economic development, in a statement.

"We will continue to work positively and proactively with Chrysler and with other auto companies to partner in a fiscally responsible way to attract new investment, new jobs, and new product lines to Ontario."

Earlier Tuesday, Marchionne told a news conference at the Geneva auto show that he regretted how Chrysler's request for government funding had become highly politicized.

"People think this is a matter of subsidizing industry — it's not," he said.

The auto giant has asked the federal and Ontario governments for subsidies, as part of an overall investment of $3.6 billion, to start production of the new Chrysler minivan in Windsor.

In January, it said it was considering a billion-dollar upgrade at its Ontario plant but it was in talks with the government about an incentive package that would help offset higher costs in Canada.

The Chrysler assembly plant in Windsor produces the Dodge Grand Caravan and Chrysler Town & Country minivans as well as several other vehicles.

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